Increasing your impact in your community through marketing

pricing

For social goods like health care, the buyer and the end consumer are often two different parties. In much of health care, an insurance company or a government agency is the buyer, while the individual patient is the end consumer. At least in the United States, for-profit medicine companies exploit this split. They charge large organizations much higher prices than an individual consumer could afford. At they same time, they obscure the price of urgent treatments from patients. One way to avoid this exploitation is using nonprofit healthcare models.

Global treatment of hepatitis C provides a study in contrasts between for-profit and nonprofit healthcare.

The Cost of Hepatitis C

As described in this Iflscience article, hepatitis C is a viral infection that is transmitted by blood-to-blood contact. The virus can persist in the human body indefinitely. Such persistence leads to a chronic disease marked by fatigue and the potential for liver cancer.

Worldwide, approximately 71 million people are currently infected with hepatitis C. Three-quarters of infected people live in low- to middle-income countries. In 2016, 400,000 patients died and only 2.5 percent of those infected received treatment, despite the availability of drugs to cure the disease.

The problem: the price of treatment.

Before 2014, treatment for hepatitis C required months of daily pills and weekly shots, and still wasn’t very effective. Then, oral antiviral drugs came to market that were highly effective with few side effects. The price for these drugs is $80,000 for a course of treatment, even though they are not costly to manufacture and distribute.

Let’s put that price tag in perspective. It’s more than the average annual household income (find new link) in all but the richest ten countries in the world. And remember, 75 percent of hepatitis C patients live in low- to middle-income countries.

Clearly, the for-profit makers of the current antiviral drugs are exploiting the split between the buyers and the end consumers. The result is that most patients receive no treatment. Health systems that do provide treatment spend a disproportionate part of their budget on these drugs.

A nonprofit healthcare approach could change the incentives in hepatitis C treatments and lead to more, and more affordable, treatment.

Affordable Drugs for Neglected Diseases

The Drugs for Neglect Disease Initiative (DNDI) is a nonprofit healthcare research and development organization. They currently target seven diseases around the world, including hepatitis C. Seven founding organizations from around the world, including the World Health Organization and Doctors Without Borders, came together 15 years ago to form DNDI.

They have pioneered combining a new antiviral drug with another existing medication to treat hepatitis C. In clinical trials, their combination proved 97 percent effective in wiping out even severe cases of the disease. The best part is their ability to deliver a course of treatment in a middle-income country like Malaysia for just $300. That’s less than one half of one percent of the for-profit price. (Compare this to household income.)

A Marketing Mindset for Nonprofit Healthcare

How does a marketing mindset help DNDI succeed? Here are five ways.

They invest in market research to guide their mission, strategy, and tactics. For example, DNDI’s website states, with cited evidenced, that “Neglected diseases continue to cause significant morbidity and mortality in the developing world. Yet, of the 850 new therapeutic products approved between 2000 and 2011, only 4% were indicated for neglected diseases, even though these diseases account for 11% of the global disease burden.” This market shortfall leads them to focus on opportunities to alleviate neglected diseases. Check out their portfolio of projects.

They are savvy about business models. For example, their downloadable business plan describes various business models they employ: knowledge sharing, advocacy, advising, platform building, business incubating, and full-fledged research and development. They then match up the business model to the market need, to make the most impact for the efforts.

Critics of government spending claim that building quality infrastructurefor the social good is not affordable. Focus on utility and low cost, they say. No need for grand stone building with imposing facades. Their concerns touch on two core marketing topics, designand pricing.

In their recent report card, the American Society of Civil Engineers (ASCE) gave US infrastructure a grade of D+. ASCE also said bad infrastructure costs U.S. households $9 per day in higher prices, poor service, repairs, and wasted time. For just $3 per day, they say we could fix the problem. Those numbers sound small, but they add up. Multiple that household-per-day number by 125 million households and 365 days a year, and you get an annual infrastructure bill of $137 billion. Paying for infrastructure is a big decision. How to pay for things is a marketing decision regarding pricing. What are the options?

Governing common shared resources such as water supplies relies on layers of resource management. Each level of management has different roles and responsibilities, from neighborhoods and cities through to regional, state, national and international governance. Currently, the way many cities approach water quality is inefficient because resource management is not regional. Water agencies ignore problems upstream, where water quality problems start. Applying funds to upstream problems is a marketing decision related to how we price our social goods. Fixing those upstream problems reduces costs downstream for water treatment.

Can you do well while doing good? This is the ultimate question for marketer the social good. Doing well in the public and social sector means more than just money. Earning money leads to sustainability and scale, two qualities that communities desperately need and funders desperately seek.

Pricing and payments are core aspects of marketing a product or service. For public and social sector marketers, pricing isn’t always straightforward. Often the buyer isn’t the user, and the goal isn’t about making more money or beating the competition. It’s hard to put a price on open space such as watersheds and parks is hard. How do you determine a cost or value, let alone identify a buyer?

In the island paradise of Seychelles, marketers are collaborating to find a better way to price and pay for both existing national debts and new investments in commons with current funds.

According to the United Nations, a majority of the world’s population now resides in urban areas. The trend towards urbanization shows no signs of slowing, either. By 2050, two-thirds of the planet’s population will be urban. Urban areas are organically connecting into megaregions that don’t always respect existing political or natural boundaries. Marketing in megaregions demands that social and public sector marketers think in new ways about their markets.